Argentina’s central bank blocks banks from offering crypto amid IMF pressure

Argentina’s central bank (BCRA) has banned financial institutions from offering unregulated digital assets services. The move comes roughly a month after the International Monetary Fund (IMF) approved a $45 billion loan facility that required the country to discourage the use of cryptocurrencies.

On May 5, BCRA announced that financial institutions cannot enable their clients to carry out operations using digital assets, just days after two banks said they had opened up crypto trading to their clients.

The major private bank Banco Galicia and all-digital Brubank both announced this week they would offer crypto trading to customers through the investment portals on their websites. But now, the central bank said that financial entities in the country cannot allow this kind of service since crypto assets are not regulated.

Argentina’s Central Bank defines digital assets as “a digital representation of value or rights that are transferred and stored electronically using Distributed Ledger Technology (DLT) or other similar technology.”

“The measure ordered by the Board of Directors of the BCRA seeks to mitigate the risks associated with operations with these assets that could be generated for users of financial services, and for the financial system as a whole,” the central bank said in the statement.

The move comes roughly a month after Argentina signed a $45 billion debt restructuring deal with the IMF to help the country avoid defaulting on its debts. The agreement included a provision that requires the country to discourage the use of cryptocurrencies in hopes of making its financial sector more resilient. “To further safeguard financial stability, we are taking important steps to (i) discourage the use of crypto-currencies with a view to preventing money laundering, informality, and disintermediation,” stated the letter of intent outlining Argentina’s commitments to the deal addressed to the IMF.

Many Argentines have embraced crypto as a way to more easily save money while dealing with the high inflation rate in the country, as well as the currency controls reinstated by its current president, Alberto Fernández, in 2019.